How Seed Giant Monsanto Went from 2009 Company of the Year to Worst Stock of 2010

Financially speaking, Monsanto, cultivators of genetically modified seeds and anti-corporate acrimony, is in a bit of a drought. The New York Times reports: “As recently as late December, Monsanto was named ‘company of the year’ by Forbes magazine. Last week, the company earned a different accolade from Jim Cramer, the television stock market commentator. ‘This may be the worst stock of 2010,’ he proclaimed.” Forced to slash prices on underperforming products—specifically, new soybean and corn seeds—the world’s largest seed company has seen its stock diminish in value by almost half since the beginning of the year. Troubles for the American agriculture giant began in October 2009, when the Justice Department began to look into Monsanto’s licensing practices. As Donald L. Barlett and James B. Steele reported in the May 2008 issue of Vanity Fair, in the 1980s, Monsanto patented herbicide-resistant seeds called Roundup Ready. Farmers were prohibited from re-using such seeds every season, a money-saving measure that had been standard farming practice for millennia. Monsanto employees—known as “seed police” and “Mafia” by farmers—go to great, occasionally invasive, lengths to ensure that farmers buy new seeds instead of recycling old ones. The patent for Roundup Ready, though, expires in 2014. And as Reuters reported at the commencement of the formal Justice Department antitrust investigation in January 2010, “[s]eed dealers, rivals and others have complained that Monsanto was creating conditions, through contracts with seed dealers and other means, that would unfairly push farmers to buy its new Roundup Ready 2 Yield soybeans and away from the first-generation, lower-priced Roundup Ready beans.” Monsanto, for its part, said that it was cooperating with the investigation and that it will allow farmers to use Roundup Ready after 2014.

For Monsanto, last winter was not all antitrust investigations and struggling business models: the aforementioned “Company of the Year” piece was published in December. However, it was just ten months later, in September, that Forbes suggested the flattering article was “the kiss of death for the stock.” The magazine reported, “Problems that have emerged since our story include growing news of weeds that are resistant to the company’s popular weed killer Roundup. The company’s most important product is bio-engineered soybean and corn seeds that are resistant to this weed killer. This has led to widespread use of the herbicide—and now resistant super weeds.” This past spring’s series of public meetings about Monsanto’s business practices must have also failed to germinate increased investor interest. This is all to say: a word of warning to those holding stock in Forbes’s to-be-determined 2010 company of the year.